I can't see how contracting the work out can be cheaper than doing it yourself as long as the employees are at work full time. The contractor has to pay the taxes, benefits, etc., just as much as the employer, and the contractor adds a profit on top of his costs.
It can only be cheaper to the contracting agency if the outside workers do more work per hour than the employees, and this seems like it would not be the case here if the potential employees have more than a work for hire interest in the final results.